Q4 revenue up 8% to $20.2 billion dollars.

Intel beat Wall Street’s expectations again with its fourth-quarter financial performance sending the company’s stock up to an all-time high Friday after the chipmaker reported late-Thursday afternoon terrific results for the last quarter in 2019.

Twenty billion dollars. Think about that for a moment. If every human, man, woman, child or politician, oh wait, I did say, human, if every human gave Intel two-dollars and sixty-five cents in U.S., that would amount to twenty-billion dollars. We so blithely talk about billions of dollars, like it was just another café latte. If you spent the rest of your life counting one-dollar bills you could never get to one billion. And yet, Intel put that much in a bank account, somewhere, probably not the U.S., but somewhere.

OK, focus. Not only did they take in more than almost ten times Afghanistan’s national debt, after they paid all their employees, suppliers, and other obligations, they had $6.9 billion dollars left over. What the hell do you do with almost seven BILLION dollars?  Well, they gave a hunk of it to those folks who were courageous enough to buy shares in the company. Not that buying a share put anything into the actual company mind you, but they did get to take it out of the company. In 2019, Intel generated a record $33.1 billion cash from operations and $16.9 billion of free cash flow and returned approximately $19.2 billion to shareholders. Intel employs 110,200 people. Nineteen billion dollars distributed to those folks who DID make an investment in the company would give each of them $1742,000. WOW! That’d be one helluva Christmas bonus.

Intel reported its calendar Q4 2019, revenues were up 8% over the same quarter last year and 4.7% over the last quarter. The PC-centric business that Intel is trying to get out of grew 3.2% over last quarter to $10 billion, and the data-centric business that Intel is trying to transition to increased to over 12.7% over last year and last quarter.

Q4’19 was the best quarter in Intel’s history with record PC and data-centric revenue.

“In 2019, we gained share in an expanded addressable market that demands more performance to process, move and store data,” said Bob Swan, Intel CEO. “One year into our long-term financial plan, we have outperformed our revenue and EPS expectations. Looking ahead, we are investing to win the technology inflections of the future, play a bigger role in the success of our customers and increase shareholder returns.”

And long-time executive and admired Andy Bryant, Chairman of the Board, stepped down during an investor meeting on January 15. He elected Dr. Omar Ishrak to take over the position immediately.

Client Computing Group

In the fourth quarter, the PC-centric business (CCG) was up 2% on higher modem sales and desktop platform volumes. Major PC manufacturers have introduced 44 systems featuring the new, 10-nm-based 10th Gen Intel Core processors (previously referred to as “Ice Lake”), and momentum continues to build for Project Athena. Project Athena-verified devices have been tuned, tested and verified to deliver fantastic system-level innovation and benefits spanning battery life, consistent responsiveness, instant wake, application compatibility and more. Intel has verified 26 Project Athena designs to date.

In the fourth quarter, the PC-centric business (CCG) was up 2% on higher modem sales and desktop platform volumes. Major PC manufacturers have introduced 44 systems featuring the new, 10-nm-based 10th Gen Intel Core processors (previously referred to as “Ice Lake”), and momentum continues to build for Project Athena.

Intel’s collection of data-centric businesses achieved record revenue in the fourth quarter, led by record Data Center Group (DCG) revenue. DCG revenue grew 19% YoY in the fourth quarter, driven by robust demand from cloud service provider customers and a continued strong mix of high-performance 2nd-Generation Intel Xeon Scalable processors. Intel acquired Habana Labs in the fourth quarter, strengthening its artificial intelligence portfolio for the data center. Internet of Things Group (IOTG) revenue was up 13% on strength in retail and transportation. Mobileye achieved record revenue, up 31% YoY on increasing ADAS adoption. Intel’s memory business (NSG) was up 10% YoY on continued NAND and Intel  Optane bit growth. PSG fourth-quarter revenue was down 17% YoY.

Spending for R&D was $3.4 billion, up 6.7% from last quarter, and down -0.3% from last year.

Just over-under (49.8%) of Intel’s revenue comes from client computing, CCG includes platforms designed for end-user form factors, focusing on higher growth segments of 2-in-1, thin-and-light, commercial and gaming, and growing adjacencies such as WiFi and Thunderbolt.

Outlook

The company has lowered its Q1’20 revenue outlook to $19 billion, and its full-year 2020 target to $73.5 billion.

What do we think?

Fourth-quarter PC sales were up reversing the long downward trend. But Intel is forecasting a lower Q1’20 suggesting PCs (and data center) will be down. The company said it plans global reductions in its workforce. Intel said the cuts affect a relatively small portion of its workforce—fewer than 1%.

“Our ambitions have just never been greater,” CEO Bob Swan told investment analysts. “We realize it’s an increasingly competitive world and we feel like we’re well-positioned to deal with it.”

Intel shares climbed more than 5% in after-hours trading Thursday to the highest point in more than two decades.

But remember, even though Intel bills itself as a data center company, almost 50% of overall business comes from the PC and only 35% from the data center.